Articles about FinOps

Rate optimization is a cloud saving approach that involves paying the lowest rate possible for a given unit (hour, GB, etc.) of cloud usage via strategic use of commitment-based discounts, such as AWS Savings Plans/Reserved Instances and Google Cloud Platform Committed Use Discounts. To measure return on investment (ROI) from these discounts, organizations must understand and benchmark their Effective Savings Rate (ESR). ESR is the "North Star" rate optimization metric which incorporates utilization, coverage, and discount rates into a single, comprehensible figure that can be compared against industry peers.

According to the 2024 Effective Savings Rate Benchmarks and Insights Report by ProsperOps, the current Effective Savings Rate (ESR) results are generally poor. The median ESR for AWS compute services (Lambda, EC2, and Fargate) is 0 percent, indicating that many organizations are not leveraging commitment-based discounts and are paying on-demand rates. Even at the 75th percentile, the ESR is only 23 percent, suggesting significant room for improvement. These insights indicate that many organizations are not fully leveraging rate optimization as an approach to optimize cloud spend.

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New research from tech consultancy esynergy, which surveyed 700 business and tech leaders in the US and UK, finds 74 percent of organizations struggle to optimize cloud spend.

It also finds that 51 percent anticipate making a change to their cloud strategy in response to cost pressures. Increasingly they're looking at FinOps (financial operations) is to ensure that cloud resources are used efficiently.

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FinOps is increasingly being adopted, with 98 percent of respondents to a new survey from Cloudbolt either having a FinOps strategy or planning to implement one. But while 71 percent of companies have expanded funding for FinOps resources in 2023, 99.8 percent say they are still waiting to see any value from it.

In case you haven't been paying attention, FinOps is an operational framework that brings technology, finance, and business together to drive financial accountability and accelerate value through cloud transformation.

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As organizations turn increasingly to the cloud they face the challenge of understanding not just the cost but also the value of their operation.

To help organizations maximize business value from their technology investments, Flexera is launching a new solution that strengthens an enterprise's FinOps and cloud central teams, while allowing the convergence of IT asset management (ITAM) and FinOps.

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What’s the optimal way to manage cloud finances, one of the core disciplines of a FinOps practice?

The answer largely relies on automating efforts, but many FinOps practitioners haven’t taken full advantage of opportunities available to them or of the savings available to their organizations. According to a report from the FinOps Foundation, a Linux Foundation non-profit trade association focused on codifying and promoting cloud financial management best practices and standards, nearly half (49 percent) of the more than 800 respondents (with a collective $30+ billion in annual cloud spend) had little or no automation of cloud spend management.

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